(A) A CLT must have as its primary purpose to hold legal and equitable title to land and the leasing of land for the purpose of preserving the long-term affordability of housing created for predominately low income and moderate income households. When the CLT does not own the underlying land in a setting such as a horizontal property regime, it shall maintain the affordability of resale restricted condominiums or other forms of affordable housing by means of an affordability covenant incorporated within or otherwise made a part of the deed to one or more dwelling units within the regime. Among its purposes may be the ability to undertake neighborhood development of a nonresidential nature that is ancillary to and compliments and supports affordable housing. A CLT may include among its purposes the acquisition of property for future development as permitted under this chapter. A CLT shall have all of the powers granted to corporations, including the power to buy and sell land and structures, to mortgage and otherwise encumber land and structures and to enter into renewable or self-extending ground leases, restrictive covenants, and collateral agreements with an initial term of up to ninety-nine years.
(B) A CLT organized pursuant to this chapter is eligible to receive public funding and public support from any unit of municipal, county, regional, state, or federal government.
(C) The bylaws of a CLT shall provide, at a minimum, that:
(1) the organization must be open to members of the general public who support the organization's goals and purposes;
(2) the organization must be a member-based organization;
(3) that within four years of its incorporation, a majority of the members of its board of directors shall be lessees of the CLT; and
(4) the organization shall provide for the distribution of its assets upon dissolution, subject to any leases, mortgages, and other encumbrances thereon, to either a municipal corporation or a nonprofit organization that shares the purposes of the CLT and has received a determination under Section 501(c)(3) from the IRS.
(D)(1) A CLT may hold title to land and lease land predominately to members of low income or moderate income households, or other corporations or partnerships, provided the terms of any ground lease shall give the CLT the first option to repurchase any building or improvement placed on the land, or any portion thereof, at a formula-determined price set forth in the ground lease. Aggregate household income shall be determined at the time the lessee enters into a ground lease with the CLT.
(2) A CLT may charge a lease fee to the lessee. The fee must be determined by the CLT and may include property taxes and any governmental or other assessments made on the land, an administrative fee, and a land use fee. The method of determining the lease fee must be set forth in the ground lease. Nothing in this section shall prohibit a state, local, other funding agency, or a lender from placing in escrow all or part of the lease fee.
(3) A ground lease between a CLT and a lessee shall include provisions designed to preserve long-term affordable housing on the land. The provisions may include, but shall not be limited to, a first option to purchase and a specification of restrictions on the resale, subletting, or assignment of improvements on the land. The provisions shall not be subject to any general statute or rule of law limiting the duration, degree, or nature of restraints on real property, including, but not limited to, the common law rule against perpetuities, the Uniform Statutory Rule Against Perpetuities, and the rule against unreasonable restraints on alienation.
(4) A lessee's interest in a ground lease with a CLT shall constitute an interest in real property. Any loan made to the lessee may be secured by the lessee's leasehold interest in the same manner as any other loan secured by real property.
(5) Real property taxes shall be apportioned in the ground lease between the landowner or CLT and the lessee. The landowner or CLT and the lessee shall be responsible for the taxes on the property that it owns, although the CLT may include property taxes on the land in the lease fee that is charged to the lessee. The lessor shall be responsible for the taxes and assessment on the land. The lessee shall be responsible for the taxes and assessments on all improvements made on the land.
(E) A CLT shall enter into a written lease agreement with the lessee containing the terms by which the land is leased. In addition to provisions designed to preserve the long-term affordability of housing and other improvements on the land, this written agreement must comply with the following:
(1) the duration of the lease must be stated in the agreement and may be of any length agreed upon between the CLT and lessee;
(2) if the agreement provides an option for renewal, the amount of lease fee to be paid for the lease of the land during the renewal period must be stated in the agreement. The provision may include a formula for determining the amount to be paid by the lessee during the renewal period; and
(3) the lease agreement must specify the location and approximate size of the parcel of land to be leased, the annual and monthly ground rent, the administrative fee, a statement of amounts to be paid by the lessee including, but not limited to, taxes and assessments, security deposits, service fees, utility fees, and installation charges, the date payment is due, the place of payment, the personal property, services, and facilities provided by the CLT, the regulations governing residency which, if violated, may be cause for cancellation of the lease, the improvements, if any, which the lessee may make to the leased land including landscaping, the improvements, if any, required to be made by the lessee, restrictions, if any, regarding pets, children, number of occupants, and vehicles and other personal property storage, the lessor's right to inspect the property, and the notice required to exercise any option for renewal or to terminate the ground lease. In addition, if applicable, the lease agreement must specify if membership in a homeowners association is required, and a statement of amounts to be paid by the lessee for membership in the homeowners association, the date payment is due, and the place of payment.
(F) Land that is owned by a CLT, and buildings that are rented, sold or leased by a CLT subject to, or planned to be leased subject to, long-term rent or resale restrictions designed to ensure such buildings will remain affordable to low income or moderate income households for at least thirty years, shall be appraised, assessed, and taxed in accordance with the requirements of this section. The assessor must use the income approach as the method of valuation for the land classified under this section and must take resale and rent restrictions that apply to the buildings into consideration in determining the taxable value of this land. The assessor must base the assessment of the property upon the actual income generated by the property and may not take into consideration in reaching a decision the amount of any federal or state income tax credits received by the property's developer in determining the taxable value attributable to the land and buildings. Affordable housing offered for rent or sale by the CLT, encumbered with rent or resale restrictions designed to ensure their affordability for low income or moderate income households, must be eligible for any homestead exemptions provided by law.
(G) Properties purchased, sold, or repurchased and resold by a CLT, including properties held in a CLT, must be assessed the real estate deed recording fee only once per transfer at the time of the resale to a homebuyer.
HISTORY: 2012 Act No. 256, Section 1, eff June 18, 2012.